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Tax Debt Pros

Tax Audits Frequently Asked Questions (FAQs)

What is an audit?

The IRS examination is to verify the accuracy of an individual or corporations tax return.  It is the taxpayer that is responsible for providing all support of records, so it is encouraged that the taxpayer maintains good records.

How Will I Be Notified That I Have Been Selected for Audit?
If the IRS thinks you made a minor mistake, they will send you a notice. In the notice, sometimes called a paper or correspondence audit, you'll be asked to send additional documentation to back up claims that you may have made; requests could include receipts or canceled checks for charitable donations or mileage logs for business travel.

If you have been chosen for a field or in person audit, the IRS will send you a notice advising that you have been selected for examination. The notice will state which years the audit will cover, and you'll be asked to call an agent to set up a time for the audit. The agent will advise ahead of time what records you'll need to make available.

If I receive a letter from the IRS notifying me of an audit, what do I do?

We recommend that our clients first send us a full copy of the IRS letter by fax or email so that our experts can give you the best advice on how to proceed.  We do not recommend you contact the IRS without speaking to us. Often, a taxpayer does not know the proper verbiage to use with the IRS and can find themselves confused, hindering the resolution, or affecting their case in a negative way.  We will prepare you a Power of Attorney form which gives our Experts permission to represent you.

How long do audits last?

Audits vary in length.  They can last anywhere from a couple of weeks to months.  The amount of time required depends on the audit scope, the ease in obtaining the required information, and the quality of the client’s records.

What is the best way to avoid an audit?

The following situations can make you more susceptible to an audit: Failing to include a 1099 or other income, inflating home office deductions, claiming disproportionately high charitable donations, reporting rental real estate losses when you don’t materially participate, or citing too many business related expenses.  Of course, there is no absolute way of avoiding audit but paying attention to these factors may greatly reduce your risk.

Can I Be Charged With Fraud?

Yes, but it's very rare. Only about two percent of audited taxpayers are charged with tax fraud. To be charged with tax fraud, you must owe at least $70,000 to the IRS.

Do I Have to Let the IRS Agent Into My House?

No. Without an express invitation from you, agents cannot enter your residence unless they have a court order. However, if you've claimed a home office deduction on your return, the agent might void the deduction if he or she is not able to inspect the home office.

What If I Can't Get the Information Within the Date Specified?

If you can't get the requested information by the date specified, ask for more time. Reasonable requests are generally granted, and it's better to offer all the information asked for a bit late than not at all.

What If I Don't Provide the Information Requested?

If you don't furnish the information requested in writing, the IRS may recalculate your return assess additional tax, together with an accuracy penalty. If you fail to respond to a request for an in-person audit, or refuse to cooperate, the IRS could seek a court order to force you to comply (that is, however, a rare occurrence). Most likely, they'll simply assess more tax plus interest and penalty.

What Are My Appeal Rights?

You don't have to accept an audit report that you disagree with. You can appeal the report by sending a letter to the IRS within 30 days after receiving it. If you request an appeal, you'll be assigned an appeals officer who is not part of the IRS division that performed your audit. You'll have a chance to plead your case directly with that officer. If you fail to convince the appeals officer, you have another chance: You can file a petition in U.S. Tax Court.